/ world today news/ The Russian media missed the information that the US is preparing a “digital trade deal” for the countries of the Indo-Pacific region, excluding China. It is not just that the US wants to limit China in creating its own “digital zone”, everything is much deeper – the fight for the future of the global financial system begins.
In mid-July, it was reported that the development of a digital trade agreement covering the Indo-Pacific economies was being considered in the US as a way to limit China’s influence in the region. The US wants to see at least Australia, Canada, Chile, Japan, Malaysia, New Zealand and Singapore in this agreement. The agreement will establish standards for the digital economy, including rules for data use and storage, simplification of e-commerce and customs procedures.
The digital trade agreement “will put the US back in the trade game in Asia as it capitalizes on the benefits of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” wrote former acting US Deputy Trade Representative Wendy Cutler.
“For the U.S. to be really effective in Asia, we need to make clear that we have an economic plan, a set of commitments, and you’re going to see fragments of that over the next little while,” said Kurt Campbell, the White House’s top adviser on Asian affairs. He added that the administration was exploring “what can be done on the digital front,” but did not elaborate.
Only rumors of a “digital trade deal” have already received a response from China. China’s Zhenmin Zhibao newspaper published an editorial stating that China’s exclusion from the proposed deal reveals the real goal of the US, which is to control China’s influence in the region. The US wants to maintain its hegemony, “while for the signatories these US-dominated agreements are more like shackles, restricting trade and freedom of cooperation. The US wins and they lose.”
Chinese Foreign Ministry spokesman Zhao Lijian said on July 13 that the potential agreement “violates the laws of economics and the common aspirations of countries in the region.” “It fully exposes its conspiracy to unite against China, hinder its development and hinder the overall development of countries in the region,” he said. “It is doomed to failure,” the official is convinced.
That same day, US Treasury Secretary Janet Yellen, speaking in Brussels to European finance ministers, accused China of misconduct and human rights abuses and called for a US-European “united front” against China’s “unfair economic practices”. . “If we confront these threats with a united front, the more successful we will be,” Yellen said.
Not many people know that China has released the CVER (Digital Currency Electronic Payment) application on 04/18/2021 to work with the digital currency of the central bank of China – the digital yuan. So far, the digital yuan using blockchain technology has already been tested among the population. China’s Global Times reported on June 30 that Beijing has the right to use digital yuan to pay for subway rides, and the Beijing 2022 Winter Olympics is likely to be the first to use digital yuan in large-scale cross-border payments.
The publication also stated that European Central Bank Governing Council member François Villerois de Galhau expressed concern that China’s rapid progress in developing the digital yuan poses a risk to the euro’s monetary sovereignty. He urged European politicians to speed up the development of their own digital currency plans.
Already on July 14, it was reported that the European Central Bank launched the “digital euro” project. The ECB has previously expressed concern that payments in the eurozone are being made through systems such as Visa and Mastercard, which are based outside the EU bloc. In addition, the use of transaction information by private companies was troubling. Issuance and transactions will now be fully under the control of the ECB, the first stage of the “digital euro” project will last 2 years.
The same day, at a hearing in the US Congress, the head of the US Federal Reserve, Jerome Powell, on repeated questions about the introduction of digital currencies, said that the Federal Reserve is only looking into this matter. Not that Powell is afraid to admit that the digital yuan will overtake the dollar in international payments, although that risk is indeed present with China’s 12.8% share of global trade. The problem is that even launching the Federal Reserve’s own digital currency threatens the existence of the dollar and the entire current financial system.
The central bank’s digital currency not only facilitates the transfer of funds, with its launch traditional banks, of which the Federal Reserve itself is composed, lose their primary function of intermediation and payments, and teller services become unnecessary in the future.
With the instant transfer of digital currency anywhere in the world around the clock, the need for bank clearing and waiting for deposits disappears. Then there is the question of bank reserves and the credit multiplier, because even without this, the central regulator can have a direct impact on inflation, for example by issuing digital currency directly to its citizens’ electronic wallets.
Of course, in every country the banking lobby will try to preserve the ability to issue digital currency out of thin air using a credit multiplier. This raises the question – whose interests will be raised to the rank of law by officials: the state or private banks. Once again, I want to point out that we are talking not only about changing the monetary policy, but also about changing the state financial system as a whole.
In view of the above, it is not at all surprising that the US is trying to limit the realization potential of the digital yuan by promoting a “digital trade deal” for the Indo-Pacific countries, which are China’s main trading partners. If China excludes the issuance of digital currency by private banks and this type of financial system turns out to be more efficient, then it will completely discredit the economic model of the West along with its ideological postulates.
All this is a perspective not for decades, but literally for a few years, since the changes will go like an avalanche. In the event that China is the first to fully launch the digital yuan, with the ability to make cross-border payments, this will immediately make it a promising investment asset in the era of negative interest rates. Money from “fiat” to “official figure” will flow like a river that will immediately inflate its rate.
Thus, it can be argued that the fight for the future of the global financial system is already underway. Russia, although it does not have the scale of foreign trade similar to that of China, in the course of the ongoing struggle, it retains a chance to create its own currency zone. Some optimism is inspired by the planned trial of the digital ruble by the Central Bank of the Russian Federation in 2022.
Translation: V. Sergeev
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